Manufacturing overhead Cost of goods sold 608,000 P1,600,000 The company has created an activity -based costing system to evaluate the profitability of its products. Low-Tek's ABC implementation team concluded that P50,000 and P100,000 of the company's advertising expenses could be directly traced to B300 and T500 respectively. The remainder of the selling and administrative expenses was facility-sustaining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Activity Cost Pools (and Activity Activity Manufacturing Overhead Measures) B300 T500 Total Machining (machine-hours) P213,500 90,000 62,500 152,500 Setups (setup hours) 157,500 75 300 375 Product-sustaining (number of products) 120,000 1 2 Other (facility-sustaining cost) 117,000 ΝΑ ΝΑ ΝΑ Total manufacturing overhead cost P608,000 Required: 1. Determine the plantwide POHR used under the company's traditional costing system. 2. Compute the gross profit (loss) for B300 under the company's traditional costing system. 3. Compute the gross profit (loss) for T500 under the activity-based costing system.

Manufacturing overhead Cost of goods sold 608,000 P1,600,000 The company has created an activity -based costing system to evaluate the profitability of its products. Low-Tek's ABC implementation team concluded that P50,000 and P100,000 of the company's advertising expenses could be directly traced to B300 and T500 respectively. The remainder of the selling and administrative expenses was facility-sustaining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown below: Activity Cost Pools (and Activity Activity Manufacturing Overhead Measures) B300 T500 Total Machining (machine-hours) P213,500 90,000 62,500 152,500 Setups (setup hours) 157,500 75 300 375 Product-sustaining (number of products) 120,000 1 2 Other (facility-sustaining cost) 117,000 ΝΑ ΝΑ ΝΑ Total manufacturing overhead cost P608,000 Required: 1. Determine the plantwide POHR used under the company's traditional costing system. 2. Compute the gross profit (loss) for B300 under the company's traditional costing system. 3. Compute the gross profit (loss) for T500 under the activity-based costing system.

Name: EXERCISE 2Low-Tek Manufacturing Incorporated makes two types of indus
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Description: EXERCISE 2Low-Tek Manufacturing Incorporated makes two types of industrial component parts - the B300 and theT500. The Income Statement for the most recent period is shown below:Low-Tek Manufacturing IncorporatedIncome StatementSalesCost of goods so

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 45E

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